COLONIES PARTNERS, L.P., Petitioner, v. THE SUPERIOR COURT OF SAN BERNARDINO COUNTY, Respondent; THE INLAND OVERSIGHT COMMITTEE et al., Real Parties in Interest.
No. E058044
Fourth Dist., Div. Two.
Aug. 17, 2015.
A petition for a rehearing was denied September 4, 2015, and the petition of real parties in interest for review by the Supreme Court was denied November 24, 2015, S229548.
239 Cal.App.4th 689
Arent Fox, Stephen G. Larson and Jerrold Abeles for Petitioner.
No appearance for Respondent.
Leibold McClendon & Mann and John G. McClendon for Real Parties in Interest.
HOLLENHORST, Acting P. J.---Real parties in interest The Inland Oversight Committee (IOC) and Citizens for Responsible Equitable Environmental Development (CREED and, together with IOC, plaintiffs) are taxpayer organizations that have brought suit challenging a November 2006 settlement agreement between petitioner Colonies Partners, L.P. (Colonies), and defendants County of San Bernardino and San Bernardino County Flood Control District (County and, together with Colonies, defendants), pursuant to which County paid Colonies $102 million. Plaintiffs seek to have the settlement agreement declared void under state law governing conflicts of interests of government officials, and to force Colonies to disgorge any money already paid pursuant to the agreement.
Now pending before this court are Colonies‘s appeal of the denial of its special motion to strike the complaint as a strategic lawsuit against public participation (anti-SLAPP motion) pursuant to
In its petition, Colonies contends the trial court erred by overruling its demurrer, because plaintiffs’ complaint suffers from three fatal pleading defects: (1) lack of standing, (2) the effect of a 2007 validation judgment, and (3) the inapplicability of
I. FACTS AND PROCEDURAL BACKGROUND1
The November 2006 settlement agreement between County and Colonies, pursuant to which County paid Colonies $102 million, resolved a lawsuit brought by Colonies against County alleging that County had taken 67 acres
County satisfied its obligation under the settlement agreement and stipulated judgment by issuing judgment obligation bonds, pursuant to a resolution by the San Bernardino County Board of Supervisors. Subsequently, County brought a validation action, and obtained a judgment, dated March 29, 2007, declaring the settlement agreement between Colonies and the County, the inverse condemnation judgment, and the bonds issued to satisfy the inverse condemnation judgment to be “valid, legal and binding obligations of [County].”3
In 2010, the San Bernardino County District Attorney‘s Office filed a felony indictment accusing William Postmus, a former county supervisor, of (among other things) receiving bribes---disguised as contributions to political action committees---from Colonies in exchange for his vote approving the settlement agreement. In March 2011, Postmus pleaded guilty to various bribery-related charges.
In February 2012, plaintiffs filed the present action, and in April 2012, they filed the operative first amended complaint (complaint). The complaint asserts a single cause of action for violation of
In May 2012, Colonies filed its demurrer to the complaint, and in June 2012, filed its anti-SLAPP motion. The demurrer first came on for hearing in June 2012, but the matter was continued pending supplemental briefing. Both Colonies‘s demurrer and its anti-SLAPP motion were set for hearing on September 19, 2012; the trial court overruled Colonies‘s demurrer, but continued the hearing of Colonies‘s anti-SLAPP motion.4 On October 15, 2012, the County filed its demurrer. Both Colonies‘s anti-SLAPP motion and County‘s demurrer were heard on December 13, 2012; the trial court overruled the demurrer and denied the anti-SLAPP motion.
In our opinion in San Bernardino County v. Superior Court (2015) 239 Cal.App.4th 679 [190 Cal.Rptr.3d 876], ruling on County‘s petition for writ of mandate, we discuss the issue of plaintiffs’ standing to sue at some length. We need not repeat that discussion again here, and only restate our conclusion: Plaintiffs’ complaint does not allege adequate facts to demonstrate they have standing as taxpayers to bring the claim they have asserted, whether under
In addition to the issue of standing, however, Colonies also raised in its demurrer, and raises in the petition at bar, the effect of the 2007 validation judgment obtained by County. The issue is not moot, because it bears on whether we should direct the trial court to consider in the first instance the question of granting or denying plaintiffs leave to amend, or whether we should direct the trial court to enter an order sustaining defendants’ demurrers without leave to amend. Even assuming plaintiffs could amend their complaint to survive demurrer on the basis of standing, it would be futile to allow them to do so if their claim is barred by the effect of the validation judgment, as Colonies contends. (Singh v. Lipworth (2014) 227 Cal.App.4th 813, 828 [174 Cal.Rptr.3d 131] [“leave to amend may be denied where permitting an amendment would be futile...“].) For the reasons discussed below, we find that the validation judgment does indeed bar plaintiffs’ only cause of action, even if we were to assume they could amend to sufficiently plead standing. As such, leave to amend is properly denied.
They are. Plaintiffs allege and argue that the settlement agreement “could not have been and was not a proper subject of validation in any judicial proceeding pursuant to [Code of Civil Procedure] Section 860 et seq.” And the gravamen of their complaint is that the settlement agreement is void because it was made in violation of
Fontana Redevelopment Agency v. Torres (2007) 153 Cal.App.4th 902 [62 Cal.Rptr.3d 875] (Fontana), a case that plaintiffs cite repeatedly in their briefing, is instructive. In Fontana, this court considered whether a settlement agreement between a city redevelopment agency and California‘s Department of Housing and Community Development, following an audit of the city‘s affordable housing efforts by the department, was properly the subject of a validation action, deciding that question in the negative and reversing a trial court ruling to the contrary. (Id. at pp. 907-911.) Fontana, however, unlike the present case, involved an appeal taken from a validation judgment, not a subsequent collateral attack on a prior validation judgment. (Id. at p. 905.) Here, the ruling that the settlement agreement was properly the subject of a
Plaintiffs argue that “prior validation does not preclude a subsequent challenge when new facts are discovered,” based on the circumstance that the facts underlying their challenge to the settlement agreement---namely, those underlying Mr. Postmus‘s 2010 indictment and 2011 conviction---were not publicly known at the time of the 2007 validation action. We disagree, however, that the case law plaintiffs cite supports the notion that matters validated in a validation judgment may nevertheless be collaterally challenged on the basis of later discovered facts. In Fontana, the plaintiffs did not challenge any matter that had previously been validated, but rather a later bond issuance purporting to implement, but in fact violating the terms of, a previously validated redevelopment plan. (Fontana, supra, 153 Cal.App.4th at p. 913.) Similarly, the plaintiffs in Starr v. City and County of San Francisco (1977) 72 Cal.App.3d 164 [140 Cal.Rptr. 73] challenged a later “repayment contract and project lease entered into ostensibly ‘pursuant to‘” a previously validated financing agreement and settlement agreement, but which contained “terms so new and materially different” that the court found they were not and could not have been considered as part of the validation proceedings. (Id. at p. 178.) Here, in contrast, plaintiffs seek to collaterally attack precisely the agreement that was one of the subjects of the previous validation proceedings, on the basis of later discovered facts. Plaintiffs’ approach runs squarely afoul of the principle that a validation judgment, once any appeals are exhausted, is “forever binding and conclusive.” (
In short, the claim that plaintiffs seek to assert is barred by the effect of the 2007 validation judgment. As such, even if they could amend their complaint to adequately allege standing, to allow them to do so would be futile, so it would not be appropriate to allow them leave to amend. Because the effect of the validation judgment is dispositive, we need not and do not address the parties’ arguments regarding the applicability or inapplicability of
III. DISPOSITION
The petition for writ of mandate is granted. Let a peremptory writ of mandate issue, directing the Superior Court of San Bernardino County to vacate its order overruling petitioner‘s demurrer, and to enter a new order sustaining the demurrer without leave to amend.
McKinster, J., and Miller, J., concurred.
A petition for a rehearing was denied September 4, 2015, and the petition of real parties in interest for review by the Supreme Court was denied November 24, 2015, S229548.